We've been asked several questions about whether Directors can be furloughed, and, if they can, what's the procedure.
In this article, we'll answer all those questions (with what we know so far)
Can I furlough myself/ other Directors?
The simple answer is "Yes"!
If you've found yourself in a position where there is no work, and you believe that will continue for at least 3 weeks, then yes, you can furlough yourself
How Do I Furlough myself?
You will need to create a simple furlough agreement between yourself and the Company (and other Directors if they are to be included). A furlough agreement should include:
- The date the furlough starts
- The amount to be paid during the furlough
- When the agreement will be reviewed
- A statement saying that whilst you are furloughed, you cannot work
Can I do any work whilst I am furloughed?
Simple answer is "No"! You cannot do any work for the business, apart from your duties as a Director
What are the duties of the Director? You can find a full list, here
These guidelines were issued well before furlough became a word, so are open to interpretation. However, we do believe that maintaining the Company's statutory and financial records are the responsibility of the Directors and can therefore be kept up to date.
Can I furlough for 3 weeks, then work a week and furlough myself again?
In theory, yes you can. The guidelines don't prevent you returning to work and then furloughing again. Please bear in mind that each furlough period must be for 3 weeks and we would only be able to claim the periods you are actually on furlough back from the Government
How much salary should I pay myself whilst furloughed?
We would recommend that you carry on paying your normal level of salary. For most of you, that will be £719 a month
How much can I claim back from the Government?
The Government guidelines state that you can claim back 80% of your PAYE salary. For most Directors that will give them a reclaim of £575 a month
To be clear, you cannot claim any part of your dividends back from the Government, it's your base/ PAYE salary only. This is the amount that is included on the payslip we send out each month
You also cannot increase your salary to increase your reclaim. The salary on the February payroll will be the one that the reclaim is based on
Can I continue to pay myself dividends?
Yes you can. You cannot reclaim any of your dividend payments back from the Government
Please also be aware that dividend payments are a distribution of company profits after you've paid Corporation Tax. To be able to pay a dividend, you need to have made enough profit to do so.
It is quite possible that later in the year we find you haven't made enough profit and that could cause future issues. Our advice here is to be sensible. Use our personal expenditure calculator to work out what you really need to take from the business each month
How do I make my claim to HMRC/ What's the process and timescale?
The claims for the furlough "grant" will be made through an online HMRC portal. The portal is not yet built. HMRC is aiming to have it open by the end of April.
If they hit their target, there will be thousands of applications processed into it, in a very short space of time.
It is unlikely that you will receive any sort of money from HMRC before mid May (that's my guess, rather than a published fact)
If we run your payroll, we will make the claim on your Company's behalf (if possible). As we don't yet know how the portal will work and what information is required, we cannot ask you to prepare for it at the moment. Naturally, as soon as we know, we will let you know
Claims are made per company, in line with your payroll, rather than by the individuals affected
Once we know what is required, we will be asking for more information from you to confirm furlough dates etc.
Other Considerations
It's worth noting that, as it stands, the furlough scheme is only open for April & May payrolls. That means your maximum reclaim will be 80% of 2 months salary. For most, this will be £1,150. Before furloughing yourself please consider whether you could generate more than £1,150 in 2 months
